Credit restrictions affecting Salvadoran productive sector

Producers Associations in El Salvador expressed concerns about the tightening of credit policies.

The Corporation of Exporters of El Salvador (Coexport) has detected more restrictions for new credit and for refinancing. "The processes are stricter, especially for new clients and those who are in default," said Silvia Cuellar, executive director of Coexport.

"We are worried because if we ask for refinanciny, they tell us that we have to wait a while and with the situation that is approaching, access to credit will be worse," said Nelson Calderon, president of the Salvadoran Association of Decorative Breadmakers (Acoparsal).

The other sector which has been hardest hit by the banks is the construction sector. The Salvadoran Chamber of Industry and Construction (Casalco), reported that credit for the housing projects dropped 22.5 percent. So far this year, $137.3 million has been granted in credit, while for the same period last year it was $177.2 million.

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The Association of Industrial Companies (ASI) indicated that it will need at least $200 million to reactivate the industry and investments that have been paralyzed due to lack of credit.

The proposal was made by the executive director of ASI, Jorge Arriaza, who pointed out that they are concerned about comments by the Salvadoran Banking Association (Abansa) which complained that credit from the Inter-American Development Bank (IDB) for 500 million dollars was too expensive and had short terms, in addition to the fact that certain sectors would not have greater access to the funds.

The Salvadoran Construction Industry Chamber (CASALCO) is not seeking massive loans, but more flexibility in granting credit.

La Prensa Grafica published on its website: According to Nolasco, the hope is to find new funding mechanisms in private banking, as well as to know what the requirements are to gain access to resources. Earlier this year, several construction companies went to the the Multisectoral Investment Bank (BMI) to look for financing mechanisms that would allow the development of 11 housing projects that needed an investment of $70.1 million, of which $31 million was expected to be obtained from the second-tier bank."

The export and industrial sector in the country has indicated that market conditions have worsened.

"We are now feeling a reduction in credit access, with the consolidation of the banks there is now a restrictive policy, and the international financial crisis is causing more credit to be closed due to the demand for capital in other markets," Jorge Arriaza, executive director of the Salvadoran Industrial Associacion (ASI), manifested.